What is cryptocurrency? is it safe?

what is cryptocurrency

What is Cryptocurrency? How to Invest in Bitcoin? Is digital currency real? We have a lot of such questions and we are hearing a lot of words in that context right now. 

But most of us have no idea what a cryptocurrency or digital currency is?

If you want to know more about Digital currency, be sure to check out this blog.

Cryptocurrency is a digital currency, which can be used to purchase Goods and Services and is used with online Laser cryptography to secure online transactions. 

There are many reasons why people are so interested in these virtual and volatile currencies, such as some people for more profit, some for covert trading and some speculators have pushed the prices of cryptocurrencies to very high levels and sometimes to zero.

Here are some questions that always come to mind about cryptocurrencies-

What is Cryptocurrency or Digital Currency?

online shopping using digital currency

Cryptocurrency is a type of payment and by using that you can buy goods and services online. 

Recently many companies have introduced cryptocurrency payment facilities and the company can use those currencies for better service or especially in trade. 

If you want to trade in goods or services through cryptocurrency, you need to exchange real currency with them.

Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology that is pervasive on many computers and with its help, every transaction is managed and recorded. 

Security is an important part of this technology.

How many cryptocurrencies are available in the market? What is their value? 

best crypto to invest

According to a market research website CoinMarketCap.com, there are more than 6,700 different cryptocurrencies available in the market and increasing daily.

Cryptocurrencies initially encourage people to raise and invest money and are raised through ICOs (Initially Coin Offering). 

According to CoinMarketCap.com, on April 13, 2021, the total value of all cryptocurrencies exceeded 2.2 trillion, and the total value of Bitcoin which is the most popular digital currency was approximately 1.2 trillion.

Best Cryptocurrency in The world as Per Market Capitalization 

The following list of the 10 largest trading cryptocurrency-

CryptocurrencyMarket Capitalization
Bitcoin$1.2 trillion
Ethereum$263.4 billion
Binance Coin$87 billion
XRP$81.8 billion
Tether$45.4 billion
Cardano$44.7 billion
Polkadot$39.3 billion
Uniswap$18.8 billion
Litecoin$18.1 billion
Stellar$14.9 billion
(Source- CoinMarketCap)

What is so special about Cryptocurrency?

Everyone has different reasons for the popularity of cryptocurrencies:

  • Some people look to buy cryptocurrencies as they see Bitcoin as the currency of the future, and they are most likely to buy it before its price rises further.
  • Blockchain technology is used for the control and security of cryptocurrencies and no bank or central system is used for this and it can be more secure than the based on an additional payment system.
  • Some speculators prefer cryptocurrencies because their value is constantly rising. Another reason is that they are not interested in the long-term acceptance of traditional currencies.

What is Cryptography and Blockchain Technology?

1. What is Cryptography and how does it work? 

cryptography explained

Cryptography is a method of protecting information and communications with the help of certain types of code so that only those who have the information can read and process it. 

Crypt” means “hidden” or “vault” and “graphy” means “writing”.

2. What is a Block chain?

what is blockchain? explained

Blockchain is a type of program for recording transactions that make it very tough or impossible to decode, hack, or cheat the system.

In short, in blockchain technology, for each new information new blocks are added with the help of chains, hence it is called a blockchain.

Each block in the chain contains multiple transactions, and each time when a new transaction occurs on the blockchain, the record of each transaction is added to the account of the transaction.

With the help of blockchain and cryptography technology, cryptocurrency is becoming completely secure.

Cryptocurrency is a good investment in 2021? 

is cryptocurrency safe for invest

The value of cryptocurrencies can go up a lot, but it is not possible to say when it will go down, many investors see them as speculations, not real investments.

This is because the value of cryptocurrencies can go up and down by 30% in a day.

Reason? Like real currencies, cryptocurrencies do not exchange in cash, so one has to pay more than the current value for one’s profit. We can call this theory the “Greatest fool” theory of investing. 

If you compare it to a well-managed business, it increases the value of your business by taking the right steps from time to time and increasing the cash flow in your business.

Nerdwallet authors note that “cryptocurrencies like Bitcoin, which are seen as the currency of the future, should realize that any currency needs stability.”

Cryptocurrencies such as Bitcoin may not be safe, and some big bulls of the investment community have advised investors to stay away from it. 

Notably, Famous investor Warren Buffett compared bitcoin to a bank cheque: “It’s a very effective way to exchange money and you can do it all anonymously. 

A cheque is a way to send money. “Because a cheque is never worth as much as the amount on it, it’s worth it because they can only exchange money.”

Currency requires constant stability so that traders and consumers can decide what is the right price for the goods. 

Bitcoin and other cryptocurrencies have remained very unstable throughout their history. 

bitcoin chart

for example, Bitcoin traded for $20,000 in December 2017 but then dropped to $3,200 a year later, then again it starts trading at record levels until December 2020.

Bitcoin price volatility poses a problem because people will not spend it today if the price of bitcoins rises sharply in the future 

if the value of Bitcoin is going to triple next year, why would people spend it now?

How can I buy Cryptocurrency?

Bitcoins and some cryptocurrencies are available for purchase in US dollars, but for the rest, you require Bitcoin or another cryptocurrency.

But to buy cryptocurrencies you need a ‘wallet’(Trading Platform), which can store your currency safely. 

how to buy bitcoin

Usually, you can create an account on an exchange and then you can transfer real money to buy cryptocurrencies like Bitcoin or Etherium.

Coinbase is a popular cryptocurrency trading exchange app where you can buy and sell Bitcoin and other cryptocurrencies. 

Also, the number of brokers offering online cryptocurrencies such as ‘eToro’, ‘Tradestation’ and ‘Sofi Active Investing’ is increasing. 

Robinhood Broker Company allows you free cryptocurrencies trade and investment. (Robinhood crypto is not in all states).

is Cryptocurrency legal in India 2021?

Cryptocurrencies are legal in the United States, China has banned their use but by considering other nations it relies on local governments.

Ultimately, it is up to each country to decide whether they are legal or not

Also, investors should always think about how to protect themselves from fraud.

How do I protect myself from cryptocurrency fraud? 

safety of cryptocurrency

If you are considering buying a cryptocurrency in ICO (Initially Coin Offering), read the prospectus for information and check the following points:

  • Who owns the company? Being a knowledgeable, well-known and well-known owner everywhere is a positive sign.
  • Are there any other big investors who invest in it? This is a good sign if other nominated investors want a share of the currency in the partnership.
  • Do you have a stake in the company or just a currency or token? This difference is important because if you buy a token, you can use it for exchange, and if you buy shares of a company, you share some of their share capital, which means you share in its earnings.
  • Is the chosen cryptocurrency already developed or is it raising money to develop the company? The older the currency, the more trust it can hold.

It can take a lot of time and work to find out everything from a prospectus; The more details one has, the better the chances of your validity. 

But even legitimacy does not mean that the currency will succeed going forward. This is a completely different question and requires a lot of information.

But beyond this concern, hackers have another concern, as hackers put a lot of effort into hacking computer networks that store your property. 

A high-profile person was declared bankrupt in 2014 after hundreds of billions of dollars in Bitcoins were stolen by hackers

Therefore, major stock and fund investments in the stock market do not have such risks.

Should I invest in Cryptocurrency in 2021?

Cryptocurrency is purely a speculative and volatile purchase Like Bitcoin. Trading stocks of established companies are usually less risky than investing in.

Who are the online brokers in Cryptocurrency?

Brokers Facility
CoinbaseBuy and sell more than 30 cryptocurrencies.
eTorotrading platforms with access to cryptocurrencies.
Robinhoodincluding7 cryptocurrencies including bitcoin,  Bitcoin Cash and Etherium.
SoFi Active InvestingOffers three cryptocurrencies for trading: Bitcoin, Ethereum and Litecoin.
TradeStationCryptocurrenciesOffers trading for five cryptocurrencies, including bitcoin, Bitcoin Cash and 5.
WebullBitcoin, Bitcoin Cash and Ethereum.

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